Demand for Agricultural Loans: A Theoretical and Econometric Analysis of the Philippine Credit Market
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Publisher:Ohio State University. Department of Agricultural, Environmental, and Development Economics
Series/Report no.:Ohio State University. Department of Agricultural Economics and Rural Sociology. ESO (Economics and Sociology Occasional Paper). No. 2233
Estimates of loan demand are often biased and inefficient due to data truncation and the use of data on individual loans that suffers from non-identifiability of aggregate demand and supply factors. This paper develops a framework to measure loan demand as a sum of all loans received during a period and applies a type three Tobit model to estimate it among farm households in the Philippines. The results suggest that the framework using total loans to estimate loan demand provides a statistically better fit than loan demand estimated using data on individual loans.